Social Security

Social Security is a federal government program that provides monthly income payments to retired workers, disabled individuals, and certain family members of deceased workers. It is funded through payroll taxes paid by workers and employers throughout a person’s career. For most Americans, Social Security forms one piece of a larger retirement income plan, alongside savings accounts and pensions.

The amount you receive in retirement is based on your earnings history. The Social Security Administration (SSA) looks at your 35 highest-earning years to calculate your benefit. Working fewer than 35 years means some years will be counted as zero, which lowers the average and reduces your monthly payment.

Your age at the time you claim benefits also plays a major role in how much you receive each month:

• Early filing (age 62): You can start collecting as early as age 62, but your monthly benefit will be permanently reduced, sometimes by as much as 30 percent.
• Full Retirement Age (FRA): For most people born in 1960 or later, full retirement age is 67. Claiming at this age means you receive your full calculated benefit.
• Delayed filing (up to age 70): Waiting past your FRA increases your benefit by about 8 percent for each year you delay, up to age 70.

For 2026, the maximum monthly Social Security benefit for a worker retiring at full retirement age is estimated at approximately $4,000, though most retirees receive a lower amount based on their personal earnings record. The average monthly benefit for retired workers in 2026 is estimated around $1,980.

Social Security benefits may be subject to federal income tax depending on your total income in retirement. If your combined income exceeds certain thresholds, up to 85 percent of your benefit could be taxable.

Practical example: A worker who earned a steady middle-income salary over 35 years and claims benefits at age 67 might receive around $1,800 per month. That same worker claiming at age 62 could see that amount drop to closer to $1,260 per month.

RetireGrader is not a financial advisor or fiduciary. For personalized guidance, consider speaking with a licensed financial professional or visiting the SSA website at ssa.gov.